# Financial Statement Analysis Cases Financial Statement Analysis Case 1: Vertical Analyses of Johnson&Johnson and Pfizer Inc....

###### Question:

Financial Statement Analysis Cases Financial Statement Analysis Case 1: Vertical Analyses of Johnson&Johnson and Pfizer Inc. Pfizer Inc. is a US company that manufactures and distributes pharmaceutical and consumer healthcare products that are similar to those sold by Johnson & Johnson. Use the excerpts of Johnson &Johnson's and Pfizer's income statements to answer the following questions: a. Compute each line item as a percentage of sales for both companies. b. If sales are used as a measure of size, which company is larger? c. Which company has a higher cost of goods sold relative to sales? d. Which company has higher selling, general, and administrative expenses relative to sales? e. Which company has higher research and development expenses relative to sales? f. Which company has a higher income from continuing operations relative to sales? Comment on the difference or lack of difference given other relationships observed. g. Which company has a higher profit margin? Comment on the difference between the two companies. Johnson & Johnson Pfizer 2016 $71,890 21,685 50,205 19,945 9,095 2016$52,824 12,329 40.495 14,837 7872 (amounts in millions* Net Sales Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Research and Development Expenses In-Process Research and Development Amortization of Intangible Assets Restructuring Charges, Net Interest Expense Interest Income Other Expense (income), Net Income from Continuing Operations Before Income Taxes Income Tax Expense Income from Continuing Operations Income from Discontinued Operations, Net of Income Taxes Net Income Before Noncontrolling Interests Income Attributable to Noncontrolling Interests Net Income 29 0 4,056 1.724 491 726 (368) 484 9,803 3,263 $16,540 3,655 8,351 1,123 7,229 17 S 7,246$16,540 S 16,540 S 7215 The captions for some lines have been changed for consistency in comparing the two companies Sources: Johnson & Johnson and Pfizer income statements

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